On the hook?

A term sheet put together by Goldman Sachs for the proposed downtown convention center financing package says Metro would pledge to use “legally available non tax revenues” to fill in any gaps in paying off the debt on the facility. In other words, if the tourist-targeting taxes and fees that are supposed to pay for the project came up short, the city would have to dip into other fees it collects to make up the difference, said Councilwoman Emily Evans, a vocal critic of the proposal.

Such fees come into Metro departments to pay for development reviews, rezoning applications, security alarm registrations, liquor licenses and the like, Evans said, adding that the revenue sources could change. Once Metro tapped the fee dollars for convention center debt, she said, it would need to come up with property and/or sales tax revenues to replace them and keep departments running at the same level.

“That’s the only way these deals are getting done, if you get the local government to co-sign the loan,” said Evans, a former municipal bond underwriter. “And that’s not just me talking. That’s just the world we live in.

“We have to get used to the fact that we’re going to co-sign the loan and taxpayers are going to be on the hook, or we have to reconsider this (convention center plan) as the sole answer to enhancing our tourism business.”

Metro Finance Director Rich Riebeling said the undated term sheet, which calls for a $750 million bond issue, was an early version submitted by Goldman Sachs. He said he expects to get many more versions from the investment bank before the financing plan is ready to present to the council later this year.

“The plan changes from day to day,” Riebeling said. “That’s one concept that Goldman was looking at. There’ll be 50 more different concepts that we talk about before we finalize a plan. …

“The key thing that I’ll say is that we have to have a comfort level when we go to the council to convince them that this project will pay for itself. That’s our goal, and that’s what we’re going to take to them, because that’s what they want. That’s what they expect. That’s what the public expects. When the mayor says there’s not going to be any property tax used and not going to be any sales tax used, that’s what we mean.”

Riebeling said the bond issue should be for less than $700 million now that Mayor Karl Dean has ordered the convention center construction team to bring the project in for less than $600 million. The price was expected to be $635 million until Dean issued that directive last week.

The amount of the bond issue reflects not only construction costs but also a debt service reserve fund, interest and other expenses.